Freezer Burn

Tuition freezes may be politically popular, and even appropriate in emergencies, but they often lead to dramatic hikes in future years.
January 19, 2010

Tuition freezes have long had political appeal, and a plan to halt hikes for a second consecutive year in Missouri has been met with predictable applause from students and their families. But even supporters of tuition freezes within higher education concede they are unsustainable. Indeed, historic trends suggest a few years of stable tuition can lead to dramatic single-year increases, which startle continuing students and punish an incoming cohort charged with making up for the lost revenues of prior years.

Michael Nietzel, president of Missouri State University, is aware of all the potential pitfalls of halting tuition hikes. Even so, Nietzel has joined the state’s other university and community college presidents in an agreement to freeze tuition in exchange for a promise from Gov. Jay Nixon that their budgets will be cut no more than 5 percent next year.

“Talking to presidents in other states about this, I know a number of them who would like our deal,” Nietzel said.

But the very nature of the Missouri presidents’ deal suggests the tuition “freeze” is really nothing more than a deferment. Under the agreement, public colleges would still be permitted to approve tuition increases “on the books,” so long as they don’t charge it to students this year. That’s significant in Missouri, where colleges require permission from the commissioner of higher education to increase tuition more than the rate of inflation in a given year. By approving an inflation-level increase this year -- probably about 3 percent -- Missouri colleges will build in a higher base tuition from which to impose additional increases in future years.

“In some sense it preserves the ability to raise it at a later date, and there’s no discussion of when that later date might be, if ever,” said Brian Long, director of the Council on Public Higher Education, an informal group representing the state’s 13 public universities.

Given the legal requirement that Missouri colleges seek permission to hike tuition above the rate of the Consumer Price Index, the state has some mechanisms in place to prevent dramatic increases after a freeze. But such increases have occurred in other states that have attempted to keep tuition at bay.

Take Virginia, which held tuition mostly even from 1996 to 2002, only to whack students with big increases as the effects of a recession took hold. Indeed, the net tuition revenue per full time equivalent student for Virginia colleges jumped by $773, or nearly 23 percent, from 2002 to 2003, according to the State Higher Education Executive Officers association.

“It was sort of like they put a cork in the bottle [in Virginia], then pressure built up and 'boom,' ” said Paul Lingenfelter, president of SHEEO.

The tendency to hold tuition rates down during heady days is a natural phenomenon, but it can create an unhealthy roller coaster effect, Lingenfelter said.

“In a more perfect world, states would plan for recessions, they would create rainy day funds and they would smooth these things out,” he said. “To some extent they do that, but they don’t do it as rigorously as they should.”

'Emergency Measure'

Some argue that a recession is exactly the right time to institute a freeze. Used as targeted and temporary tools, tuition freezes can cut students and families a break precisely when they need it most, according to Patrick Callan, president of the National Center for Public Policy and Higher Education

“I think it’s an emergency measure,” he said. “It’s not a good long-term policy, and what we’ve lacked in most states is an effective long-term policy.”

Callan suggests that tying tuition increases to a state’s average family income levels, helping ensure that tuition climbs in conjunction with students’ ability to pay more. Instead, the opposite is often true. There’s a tendency to cut tuition when the economy is doing well, only to have it rise again during a downturn -- just when it’s most difficult for students to endure, Callan said. Such has been the case in California, a state Callan has studied for years.

“The worst tuition increases have come when everything else [in the economy] was bad,” he said.

The tendency for universities to boost tuition in a downward economy is not surprising, given the fact that recessions typically lead to dwindling state support. And from a purely financial perspective, there’s no disincentive for universities to institute big hikes of 15 percent or more when they need money, according to a new paper entitled “Rising Tuition and Enrollment in Public Higher Education.” Indeed, universities that raise tuition at such high rates don’t experience enrollment declines to any greater degree those do with smaller increases, and they still come out ahead financially even when they raise rates and lose students, the researchers found.

“This is only a revenue generating question. There are of course political considerations and equity concerns [to consider as well],” said Dave Marcotte, a co-author of the paper and a professor of public policy at the University of Maryland-Baltimore County.

Maryland Freeze Drawing Skeptics

Among states that have frozen tuition in recent years, the University System of Maryland is often held up as a positive example. But the university became a model only after taking considerable political heat. On average, Maryland’s campuses kept tuition increases to between 3 percent and 4 percent from 1999 to 2002, but that restraint was followed by a series of significant increases -- the highest being nearly 14 percent in 2004. Faced with mounting criticism over its tuition levels, the system has frozen in-state undergraduate tuition for the past four years. In exchange, the state provided a 30 percent increase in general fund appropriations between the 2006 and 2010 fiscal years.

The increase in state appropriations, which included money for new initiatives in addition to revenues equivalent to a 4 percent annual tuition increase, was supported by students and faculty alike. But circumstances have changed. The state now projects a budget deficit of as much as $2 billion, and the university has already instituted furloughs and started cutting programs. In that context, a tuition freeze doesn’t sound so good anymore.

Elise Miller-Hooks, chair of the Academic Senate on Maryland’s College Park campus, says she’s sympathetic to calls to keep education affordable in the state. At the same time, however, it “doesn’t send a nice message” to faculty when you’re furloughing them and holding tuition flat, she said.

“It is misleading to say that a tuition freeze will enable more affordable education,” Miller-Hooks, an associate professor of civil and environmental engineering, added in an e-mail to Inside Higher Ed. “The tuition freeze in conjunction with significant cuts and furloughs means reduced offerings, larger classes, etc. As a result, some students will be required to stay an extra semester to get the courses they need to graduate. The cost of an extra semester and the opportunity loss from not working during that semester would exceed any savings in tuition achieved through the freeze. I cannot speak for all the faculty and staff members, but in my opinion, it is simply wrong to furlough our faculty and staff members while continuing to hold tuition constant for so many years.”

Marcelo Cardarelli, chair of the Faculty Senate on Maryland’s Baltimore campus, noted that tuition freezes aren’t targeted toward students of demonstrated financial need, and therefore give breaks to some families who could afford an increase.

“It gets to the point at which the cleaning lady at the university is being furloughed to support some people who could pay a little bit more tuition,” said Cardarelli, an assistant professor of medicine. “It’s a trade. Aren’t you being unfair to equally poor people? Who’s paying for this? Somebody’s paying for it. No free lunch, that’s for sure.”

William E. (Brit) Kirwan, chancellor of the University System of Maryland, opened the door to an increase last year when the budget picture darkened. Ultimately, however, the freeze remained in place. Kirwan now says he is waiting for Gov. Martin O’Malley to unveil his budget plan in the coming days before taking a position on the tuition question. While Kirwan said he was sympathetic to faculty concerns about an ongoing freeze, he stood by the steps Maryland has taken thus far.

“There is no question in my mind that, if we had raised tuition, we would have had much deeper cuts and the net effect would have put us in a less advantageous position,” Kirwan wrote in an e-mail to Inside Higher Ed. “We have been protected from larger cuts precisely because we were willing to hold the line on tuition and this has worked to our benefit. Again, we need more funding and I am very sensitive to this fact. My job is to try and maximize funding from what is possible in these times.”

As for O'Malley, the governor said in a Wednesday radio interview that he expects a "slight" single-digit tuition increase of perhaps 3 percent.

Hiring Concerns at Missouri

The Missouri presidents’ agreement with the governor to hold tuition steady presents an interesting quandary for faculty. On one hand, a guarantee that the budget will not be cut more than 5 percent -- a proposal that still needs legislative approval -- is viewed as “not a bad deal in today’s climate,” according to Leona Rubin, chair of the Faculty Senate at the University of Missouri’s Columbia campus. On the other hand, the university is under a hiring freeze at a time when faculty are eager for more resources to help support an enrollment surge.

“The fact that the numbers of tenure track faculty have not increased significantly in the last 10 years is problematic,” Rubin said.

As is the case across the country, tenured faculty lines have grown slowly in comparison to non-tenured positions on Missouri’s Columbia campus. Between 1999 and 2008, Missouri added 57 tenured or tenure track positions, representing a 4.7 percent increase. Over the same span of time, “non-regular” faculty, who are off the tenure track, grew by 196 or 52 percent.

Gary Forsee, president of the University of Missouri System, said he shares concerns about faculty numbers and faculty salaries. At the same time, it’s imperative to keep college affordable at this juncture, he said.

“We have had significant examination of that [faculty hiring] issue and understand the history,” Forsee said. “But we’ve got to recognize the country is in a very significant -- in fact generational -- recession, and the university ought to be seen as part of the solution to that.”


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